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Franco-Nevada

Orion (Oil)

Osum

LOCATION: Alberta, Canada
OPERATOR: OSUM OIL SANDS CORP.
ROYALTY: ROYALTY RATE 4%

In the third quarter of 2017, Franco-Nevada acquired a 4% GORR on the Orion Thermal Project in the Cold Lake region of Alberta from Osum Oil Sands Corp. (“Osum”) for C$92.5M. The royalty applies to the Clearwater formation and allows for the deduction of transportation and diluent costs associated with getting the product to market.

Orion is a Steam Assisted Gravity Drainage (SAGD) operation that began commercial production in 2007. Infrastructure at the project consists of a central processing facility surrounded by several well pads which supply the plant. The asset has a large resource base capable of supporting the production of heavy oil for many decades. Osum has been expanding the production capacity at the asset in recent years, and as at year-end 2019 Orion was producing approximately ~19,000 barrels per day of bitumen. Future expansion to ~25,000 barrels per day is being contemplated by Osum as they pursue further facility debottlenecking, cost reduction and staged growth opportunities.

Franco-Nevada recorded revenue of $10.2 million in 2019. Royalty payments are based on the WCS benchmark price and are impacted by changes in the differential with WTI as well as by the price of diluent, which is required to transport the product to market.

ASSET HIGHLIGHTS

  • Long life resource located in Canada
  • Stable year over year production volumes
  • Potential for future capacity expansion

2019 2018 2017
Revenue to Franco-Nevada ($ million)1 $ 10.2 $ 3.7 $ 1.5

1 Revenue refers only to payments made to Franco-Nevada